Industry Committee on May 18th, 2017

[The Chair, Liberal, Dan Ruimy]

Welcome, everybody, to meeting number 62 of the Standing Committee on Industry, Science and Technology. Today we are continuing our review of the main estimates 2017-18.

I have just a couple of quick notes. We have a very tight timetable. We've agreed that in the first round we will drop our time from seven minutes to five minutes. I will be holding everybody to that time, so keep your preambles short and we'll go from there.

Today we have with us the Honourable Bardish Chagger, Minister of Small Business and Tourism, along with Mr. Knubley, deputy minister, and Kelly Gillis, associate deputy minister.

Minister, you have up to 10 minutes.

[Bardish Chagger, Liberal, Minister of Small Business and Tourism]

Thank you, Mr. Chair and member of the committee. I am pleased to join you today in my role as Minister of Small Business and Tourism to speak about our government's work to support Canadian entrepreneurs and SMEs, our tourism industry, and the middle class.

Budget 2017 marks the next step in our plan to support Canada's middle class and those working hard to join it. Through this budget, we are taking ambitious action to support sustainable growth, build prosperous companies, and prepare Canadians for the workforce of tomorrow.

Mr. Chair, innovation has been a priority for our government since day one. It features prominently in budget 2017. We understand that Canada must innovate in order to compete and grow in the global economy. Small and medium-sized businesses, or SMEs, are often the drivers of this innovation. Through budget 2017, we are doing more to support this innovation, in part by making important investments and also by improving our processes to make it easier and simpler for SMEs to work with government.

At the heart of this plan is the creation of Innovation Canada, a one-stop point of contact for Canada's innovators and entrepreneurs. It will be the organization that leads on Canada's economic growth strategies. It will begin by reviewing the government's business innovation programs.

SMEs are critical to driving and shaping innovation. They make up more than 99% of Canadian companies, employ approximately 10.5 million Canadians, and represent about 40% of our GDP. And in many cases, they are the sources of new game-changing innovations.

We believe the Government of Canada can do a better job of supporting these businesses as their first customer. To address that, we are launching the innovative solutions Canada procurement initiative. Under this program, the government will focus its purchasing on innovative made-in-Canada products and services that improve how we deliver services to Canadians while also helping to find cost savings.

In addition to these actions, budget 2017 makes important investments that will help SMEs bring their products to market, scale up, create jobs, and export to the world. For example, we will invest up to $400 million to create a new venture capital catalyst initiative to be administered by the Business Development Bank of Canada, better known as the BDC.

This initiative will provide more late-stage venture capital to Canadian firms looking to grow and expand.

And to do our part in the global fight against climate change, we are investing $1.4 billion to support clean technology firms.

This April in northern Ontario, Minister Bains announced that the work of FedNor and Canada's other regional development agencies will take on new importance in light of the focus on innovation. Every region of the country will have a distinct innovation and skills plan that reflects regional economic realities. These plans will showcase the benefits of each region to investors and provide Canadians across the country with opportunities to develop their skills.

Supporting SMEs will be a key part of these plans. I just returned from the Prairies, where I saw first-hand the great innovative work being done by local SMEs. The same is happening right across the country. I will be working closely with Minister Bains to ensure that the regional development agencies continue to keep SMEs at the core of their work.

To truly seize new opportunities to innovate and grow, SMEs must hire the right people.

Budget 2017 proposes $2.7 billion to help unemployed and underemployed Canadians train for better jobs.

The government is especially committed to the success of Canada's young people. We are providing more than $395 million for additional youth employment and skills development opportunities, and $50 million for coding and digital skills education to help young Canadians prepare for technology jobs.

We will invest $14 million over two years in Futurpreneur Canada, which is doing amazing work providing young business owners with mentors, skills development, learning resources, and start-up financing.

Mr. Chair, women entrepreneurs and women business owners in Canada are under-represented, a problem we share with the U.S. This is a personal priority for me. We know that the number of Canadian women wanting to start a business is among the highest in the world, and yet just 16% of businesses are owned or controlled by women.

As the committee will remember, to help address this, Prime Minister Justin Trudeau and President Trump announced the Canada-United States Council for Advancement of Women Entrepreneurs and Business Leaders. This important initiative will identify actions to remove barriers to women serving in senior leadership positions and advise on boosting competitiveness for women entrepreneurs.

Beyond this, we are also committed to helping women entrepreneurs and innovators succeed. This includes encouraging procurement from companies led by women and other under-represented groups.

And BDC is doing great work—it has taken steps to become a world-leading financial institution for women entrepreneurs. This includes creating a new $40-million fund for women-led technology firms and investing $10 million to support regional initiatives for women founders.

Mr. Chair, these are exciting times for Canada's tourism sector as well. Last year, we welcomed close to 20 million visitors, over 11% more international tourists than in 2015.

Growing this sector is important. It accounts for 2% of GDP. And it employs more than 1.7 million Canadians, often in good middle-class jobs. Moreover, Canada has much to offer as we celebrate our 150th anniversary. We expect to set a new record this year.

It is time for us to leverage our successes. Last week, at Rendez-vous Canada, I announced a new tourism vision. This ambitious undertaking aims to grow and strengthen Canada's tourism industry while enhancing our country's brand.

We have laid out 20 items that address some of the biggest challenges that require action. These include lifting the visa requirement for Mexican travellers, investing to make Canada a destination of choice for LGBTQ2+ tourists, and gearing up to celebrate the Canada-China year of tourism in 2018, which we expect will dramatically increase the number of Chinese tourists coming to Canada.

Mr. Chair, our vision is reinforced by measures in budget 2017, such as reliable funding for Destination Canada, our national tourism marketing organization, and $8.6 million over four years to help grow Canada's unique and authentic indigenous tourism industry.

I'm pleased to say that we have a fruitful relationship with the provinces and territories too.

In November 2016, I co-chaired a meeting of federal, provincial, and territorial tourism ministers in Iqaluit. We agreed to work together to increase our tourism competitiveness.

Mr. Chair, the government has a clear plan: to support innovation and SMEs, help our tourism industry grow, and make it easier for more hard-working Canadians to join the middle class.

I would like to thank the committee for the opportunity to speak to you today, and I welcome any questions.

[The Chair, Liberal, Dan Ruimy]

Thank you very much for your brief comments.

We will move right into questioning. Mr. Longfield, you have five minutes.

[Lloyd Longfield, Liberal, Guelph, ON]

Thanks, Mr. Chair.

Welcome to our committee, Minister Chagger. It's great to see you here this morning.

I know it was a late night last night, with the committee of the whole. There were great discussions there as well.

I want to look at tourism and the investments that Destination Canada is showing in the estimates, going from $62,975,770 last year to $95,475,770 this year. It's a significant increase in tourism investment. I wonder whether you have a sense, as part of your modelling, of the revenue increases we might expect in terms of our economy's growth as a result of those investments.

[Bardish Chagger, Liberal, Waterloo, ON]

Yes, it was a late night, and it's a good morning.

It's a pleasure to be here. We're finally recognizing tourism as an economic driver and hence making the strategic investments.

For every dollar we invest in Destination Canada, the crown corporation leverages $1.10 from partner co-investments, resulting in $1.5 billion in attributable tourism export revenue in 2016 alone. We know that the tourism industry is 2% of GDP, supporting 200,000 businesses and over 1.7 million jobs in Canada from coast to coast to coast.

The revenues are there. What's not happened in the past is investment in the tourism industry. Destination Canada had some cuts to it.

Budget 2017 gives it basically long-term funding, $37.5 million a year, and then the other money is from programs like connecting America, the millennial travel program, and so forth.

[Lloyd Longfield, Liberal, Guelph, ON]

Guelph has been looking at its tourism models. When I was at the chamber of commerce and since then, the City of Guelph, the chamber of commerce, the downtown business association, Innovation Guelph and some of the businesses have been looking at tourism strategies.

Is it fair to say that we're not wasting time looking at investing our effort in tourism because there is matching funding as well as investment from the federal government?

[Bardish Chagger, Liberal, Waterloo, ON]

Basically the way Destination Canada works is that it is our crown marketing organization. We market to international markets predominantly, strategic markets. There is the millennial travel program, which is to encourage millennials to travel and explore the country, because stats show that they will.

Destination Canada works with provinces and territories. I co-chair the FPT meeting, so provinces, territories, and the federal government come together at one table. Our last meeting was in Nunavut in Iqaluit, which I was referring to, where we signed the Nunavut declaration, setting priorities for provinces and territories for the federal government or Destination Canada to work with them. The municipalities, cities, and so forth would work with their provincial organizations and are always welcome to connect directly with Destination Canada as well.

[Lloyd Longfield, Liberal, Guelph, ON]

Perfect, thank you. As Gudie Hutchings always says, “coast to coast to coast”.

We just finished a bit of a study on Stats Canada, but I think we need some further work, looking at $8.3 million going into tourism data, looking at supporting small business with data and analysis. Again, our downtown business association is looking at what types of people shop in the downtown, where they come from, their demographics.

Could I maybe have a comment on Stats Canada's relationship with your ministry?

[Bardish Chagger, Liberal, Waterloo, ON]

In budget 2017, we saw an investment in Statistics Canada to broaden tourism data collection. We need this data to effectively measure the growth of our tourism industry and to assess the effectiveness of our international tourism marketing efforts, so better data on domestic travel. It will also strengthen planning for domestic tourism activity. That's where this commitment of $13.6 million over five years is coming from, and then $2.7 million thereafter, to expand Canada's tourism data collection.

Basically this investment will be used to address existing data gaps, in particular for international tourists who enter Canada by land as well as for international and domestic visitors to the north, while broadening the sample size for specific regions. This is to enable Destination Canada to better look at what markets we want to be targeting. Where are people coming from, and where is the potential in other markets?

We also want to be looking at the average spend of the visitors. We want to ensure they are bringing those export dollars to our country, helping our SMEs. It is also so that I can better ballpark when you're asking me questions like this. What is the potential? Where are we at? What's the curve looking like?

As you know, the government believes in evidence-based decision-making, hence an investment to make sure we have good data to back that as well.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you, Minister, and don't be surprised if you get an invitation to come to Guelph and join one of our round tables.

[Bardish Chagger, Liberal, Waterloo, ON]

Guelph is a great region. It is close to the Waterloo region, so I welcome any opportunity.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We're going to move to Mr. Richards. You have five minutes.

[Blake Richards, Conservative, Banff—Airdrie, AB]

Thank you, Mr. Chair.

Minister, thank you for being here today.

I'll start with a yes-or-no question, or a very brief response. I want to ask if you agree that campgrounds play an important role in the tourism industry.

[Bardish Chagger, Liberal, Waterloo, ON]

I believe that every facet plays an important role in the tourism industry.

[Blake Richards, Conservative, Banff—Airdrie, AB]

Campgrounds would be part of that, then, would you say?

[Bardish Chagger, Liberal, Waterloo, ON]

I'm very inclusive. I think that every community is touched by the tourism industry. It's an economic driver that's not been represented well.

[Blake Richards, Conservative, Banff—Airdrie, AB]

It's not a really good start because we can't even get a “yes” or “no” answer to something as simple as that. Anyway, I'll take that as a “yes”.

I want to ask, then, if you do believe campgrounds have an important role in the industry. There is an issue that is very directly and very negatively affecting that particular sector of the industry, and I think it has the potential to affect a lot of other parts of the industry, as well. It's one that your government is really ignoring. We're hearing talking points, but we're getting no answers for the campgrounds as to how you are going to help them.

There is a rule that's being used to target campgrounds, saying that their income is passive. Certainly, there is no doubt that the work involved in campgrounds is anything but passive. Your government's argument is essentially that some small businesses are too small to be small businesses, which is ridiculous.

Recently you, the Minister of National Revenue, and the Minister of Finance co-signed a letter to the Canadian Camping and RV Council that states that you recognize the important role that campgrounds play. You also, in that same letter, claim that the rules around active versus passive income haven't changed. However, you are basically telling them, “Too bad, so sad”, and that you're going to continue to target their businesses as being too small to be small businesses.

This was something we recognized as an issue when we were in government, and we began a review of the rules. Your government cancelled that in your first budget. That was after having 12 of 13 submissions say that there was a real problem there and that this needed to be addressed and fixed—obviously, something your government ignored.

Then on August 23, 2016, the CRA, of course, released a new interpretation of the rules, and they're going after campgrounds.

The finance committee, however, in its pre-budget report for this year's budget, recommended:

That the Government of Canada [should] recognize the income earned by campgrounds and storage facilities as “active business income” for the purpose of determining eligibility for the small business deduction.

That's a pretty clear recommendation, and your government ignored it.

Minister, I want to ask you, given all that, how can you claim that these rules haven't changed? How can you actually say you support small businesses when your Liberal government is trying to target some small businesses and put them out of existence?

[Bardish Chagger, Liberal, Waterloo, ON]

As I've said on the record, and as I will continue to say, I will always work collaboratively with my colleagues. The previous government and this government have very different approaches. We believe we can work together.

[Blake Richards, Conservative, Banff—Airdrie, AB]

Minister, let me just interrupt you on that because my time is quite short. To say you'll work collaboratively is one thing; to do it is another. You're saying that, but you're certainly not doing it. When you send a letter to campgrounds basically saying, “Sorry, we didn't do anything to change the rules,” when it's very clear you have, I think it's a pathetic excuse to say, “Well, we'll work with them collaboratively.” You have to actually do that.

Maybe we can try a different subject because I don't think we're getting anywhere with this one. I'd like to ask you, Minister, if you would agree that labour is a very important part of the tourism industry.

[Bardish Chagger, Liberal, Waterloo, ON]

Jobs are important to the Canadian economy. That's why we're making investments to create the conditions for growth so that the economy can grow.

[Blake Richards, Conservative, Banff—Airdrie, AB]

Okay.

Again, we're having a difficult time getting a “yes” or “no” answer, Mr. Chair, but we'll take that as a “yes”.

As you mentioned in your opening remarks, you did, of course, release last week a new “tourism vision”. I'll put that in quotations because the “tourism vision” is nothing really but a rehash of the federal tourism strategy our government put in place—and that was certainly something we were proud of.

Having said that, when I look at that vision.... After claiming there was consultation, your government really brought nothing new to the table in that regard. However, the one thing your new vision did do was leave out one of the main priorities of the previous tourism strategy: to foster “an adequate supply of skills and labour to enhance visitor experiences through quality service and hospitality.” That's completely gone.

So, your vision clearly has no plan for “an adequate supply of skills and labour” for the tourism industry. On the very last page, I believe, there is one very small mention of labour. I really want to have you explain to us why you think this should not be an important issue facing the tourism industry and why it's not one of your priorities, because it is a very significant issue facing the industry.

[The Chair, Liberal, Dan Ruimy]

Unfortunately, you have run out of time, so we're going to move on.

[Blake Richards, Conservative, Banff—Airdrie, AB]

Well, we wouldn't have gotten an answer from the Minister, I'm sure, anyway, so thank you, Mr. Chair.

[The Chair, Liberal, Dan Ruimy]

You're entitled to your comments. The Minister is entitled to hers.

We're going to move on.

Brian Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thank you, Madam Minister, for being here.

In your discussion, you mentioned the Trump-Trudeau initiative or council for the advancement of women. As you are aware, we have a piece of legislation, Bill C-25, that would require some better standards for women on a corporate board of directors. Your government has chosen not to amend that and has chosen to do a “comply and explain” model. This has been discussed in the House of Commons, the debate has been through, and we're going to the final reading. We're going to a very weak model.

Why is it, at a time when you are setting up an American initiative for women leadership in business, that we would not actually meet the average standard of other countries that have been progressive on this? Why leave it to the Trump-Trudeau initiative rather than the legislation that's in the House of Commons?